South Korea Orders Tesla to Pay Millions for Overstating Range

Photo: Allison Dinner (Getty Images)

Tesla will have to pay South Korea a little more than $2 million over alleged false advertising, the EV maker has a bona fide second-in-command behind Elon Musk now, and Hyundai and Kia have hopeful targets for the new year. All that and more in this January 3, 2023 edition of The Morning Shift.

1st Gear: Tesla Fined

South Korea’s Fair Trade Commission (KFTC) has fined the EV maker 2.85 billion won — about $2.2 million — for failing to represent the reduction in range of its cars in cold temperatures, Reuters reported Tuesday morning. According to the department, the maximum range of Tesla vehicles on a full charge can drop by as much as 50.5 percent in such conditions, which is roughly 10 percent more than most EVs on average according to data from the country’s environment ministry. From Reuters:

The Korea Fair Trade Commission (KFTC) said that Tesla had exaggerated the “driving ranges of its cars on a single charge, their fuel cost-effectiveness compared to gasoline vehicles as well as the performance of its Superchargers” on its official local website since August 2019 until recently.

[…]

On its website, Tesla provides winter driving tips, such as pre-conditioning vehicles with external power sources, and using its updated Energy app to monitor energy consumption, but does not mention the loss of driving range in sub-zero temperatures.

Reuters added that this is relatively small potatoes compared to the KFTC’s fine for Mercedes-Benz last year over false advertising related to diesel emissions. That episode cost the German automaker 20.2 billion won, or about $16.5 million, but it also involved defeat devices and cheating emissions tests.

Tesla actually tweaked its copy about the Model 3’s range on its Korean site last February, after the KFTC alerted the company of its findings. The pages for all its models in the region currently mention (translated) that “the indicated [range] may vary depending on external factors, such as speed, weather conditions, and road conditions.” That message doesn’t appear on Tesla’s U.S. model pages.

2nd Gear: Tesla’s Second-In-Command

Tom Zhu, who was already Tesla’s vice president for the Greater China region, has gained additional responsibilities. Zhu now oversees U.S. production and sales in North America and Europe, which effectively makes him second in the pecking order behind Elon Musk. As Reuters reported Tuesday:

The reporting lines for Zhu would keep Tesla’s vehicle design and development —both areas where Musk has been heavily involved — separate while creating an apparent deputy to Musk on the more near-term challenges of managing global sales and output.

Tesla did not immediately respond to a Reuters request for comment.

Reuters reviewed the organizational chart that had been posted internally by Tesla and confirmed the change with two people who had seen it. They asked not to be named because they were not authorized to discuss the matter.

Zhu and a team of his reports were brought in by Tesla late last year to troubleshoot production issues in the United States, driving an expectation among his colleagues then that he was being groomed for a bigger role.

Zhu joined Tesla way back in 2014, but has done well for the brand as of late, commanding an increase in production from its Shanghai plant despite COVID lockdowns. The whole “closed-loop” system? Yup, that was Zhu. Shanghai “accounted for more than half” of Tesla’s worldwide production through the first three quarters of last year, per Reuters.

3rd Gear: French Car Sales Are Down

The year 2022 saw a nearly 8 percent drop in new car sales in France, according to data from regional industry group Plateforme de la filière automobile revealed Sunday, via Reuters.

It could have been much worse, as the ripple effects from the semiconductor shortage and supply chain bottlenecks caused by Russia’s invasion of Ukraine earlier in the year depressed purchases early on. The back half of 2022 saw a rebound, but not a complete one. Electrified vehicles continued growing, however. Bloomberg offers context:

Stellantis, which owns the French Citroen and Peugeot brands, saw car sales drop 24% [in December]. Renault Group new registrations dipped only 0.9%, helped by a 19% increase for its less expensive Dacia models. The two carmakers together made up almost half of the market.

Electric and rechargeable hybrid vehicles accounted for a quarter of new car sales last month, the highest level of the year. This took the share for 2022 to 22%, up from 18% in 2021 and 11% in 2020, according to the PFA.

The market for light trucks kept contracting, with new sales down 14% last month for a full-year decline of almost 20%.

4th Gear: Hyundai, Kia See a Brighter 2023

The Korean automaker discussed healthier targets for the coming year, predicting a 10 percent jump in sales across the entire group if all goes according to plan. Again, Reuters, by way of Automotive News:

The companies sold 6.85 million vehicles in 2022, about 4 percent less than their combined target of 7.16 million vehicles, largely due to problems including chip and component shortages.

The companies said they would target global sales of 7.52 million vehicles this year.

“Hyundai plans to expand market share and operate profitability oriented businesses by flexibly responding to market changes, accelerating its transition to electrification, responding to global environmental regulations, and optimizing production, logistics and sales by region,” the company said in a statement.

Analysts said the sales targets of the two companies for this year appear to be aggressive but achievable, considering pent-up demand for vehicles.

Last year, the brands forecasted a combined 12 percent increase in volume, which they didn’t quite reach. The press release for today’s announcement mentions the Ioniq 5 N among the manufacturer’s 2023 slate of launches — a car that is guaranteed to be anything but a volume seller, though I appreciate Hyundai’s enthusiasm for its big, electric Delta Integrale.

5th Gear: Also, You Can’t Buy a Gas-Powered Hyundai in Norway Anymore

Much is made of Norway as an EV haven that gives us a view of what the global automotive landscape will look like in a decade’s time. I don’t know if that’s entirely accurate or just wishful thinking, but it is nevertheless amazing to read that major automakers are retiring their internal-combustion cars there already. Like Hyundai, for example. Courtesy Electrek, which published this on New Year’s Eve:

Hyundai will stop selling any cars with ICE engines in them, including plug-in hybrids, in Norway starting 2023 – one day from now.

Norway has been leading the charge in vehicle electrification for some time, well ahead of the rest of the world in EV market share percentage. Virtually all vehicles in the country have a plug nowadays, with ICE-only vehicles only holding on to a meager few percent of the market.

The decline of gasoline-powered vehicles has been so drastic that despite Norway’s goal to end gas vehicle sales by 2025, the country is already teetering on meeting that goal several years early. There is still a trickle of cars being sold without plugs in them, and we expect that to continue for some time, but for practical purposes, Norway is hovering very close to its goal.

Last year, 64.5% of cars sold in Norway were all-electric, up 10% from the previous year, and this year those numbers are up even further. We’ll get a final number in a couple days, but BEV market share should be just above 80%, with PHEV market share at 10% or so, and petrol- and diesel-only vehicles at 4-5% each.

That’s right — you can’t even buy a plug-in hybrid Hyundai in the country as of today. Though, with almost 65 percent of new cars sold in Norway being battery-electric in 2022, now seems like the right time to make the switch. Compare that to here, where EVs just cracked 5.3 percent of the overall market through the first 10 months of last year.

Reverse: Forever In Spirit

Neutral: I Am a Mountain, I Am the Sea

Credit: Richard Andrew via YouTube

I can’t pinpoint the moment I first learned about Ken Block, but I remember watching that legendary 2006 X Games rally event live — in which he took bronze — and I played Dirt 2 and 3 extensively. Following Colin McRae’s death in 2007, the video game series that bore his name passed the torch to a new generation of rally stars, and Block and his WRX fittingly served as the heroes of those games. Remembering all of this as we’ve lost another legend of the sport far too soon feels familiar in the worst way.